Chinese and international benchmark coal prices have jumped in recent days to multi-month highs as Chinese thermal coal power generation surged in October while domestic production fell amid curbs to address excess capacity and oversupply in key industries.
This week, thermal coal prices at Qinhuangdao port assessed by consultancy SteelHome hit the highest in a year as they rose by 37% from the four-year lows seen in July, data compiled by Reuters columnist Clyde Russell showed.
The higher Chinese prices led to higher prices for the key Indonesian and Australian thermal coal benchmarks, which rose to six-month and 11-month highs, respectively, last week.
The higher prices were the result of surging Chinese thermal coal demand for power generation and reduced domestic coal production amid government measures to curb oversupply and support coal prices.
China’s coal production dropped by 2.3% in October from a year earlier, data from the National Bureau of Statistics showed last week. Year to date, coal output was still 1.5% above year-ago levels, due to record-breaking production in the first half of 2025.
At the same time, power generation in China jumped by the most in October in nearly two years and overall electricity output was at its highest for any October since at least 1998, as a heat wave hit southern China while temperatures were colder-than-usual in the north.
Thermal power output rose by 7.3% last month as coal picked up most of the surge in electricity generation, while wind and solar power saw curtailments, analysts say.
“October was unusually hot in the south, and much colder than previous years in the north. The rapid increase in air conditioner ownership means that people are using them more for heating in northern China, especially before district heating is turned on in November,” Lauri Myllyvirta, co-founder of Finland-based Centre for Research on Energy and Clean Air (CREA), wrote on LinkedIn in comments on the Chinese data.
Coal demand is expected to remain elevated during the winter months as China continues to rely on thermal power as a reliable source of energy to meet most of its power demand.
By Tsvetana Paraskova for Oilprice.com
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